What is the difference between NAV and stock price?
net asset value (NAV) at the end of each working day. This is displayed on the fund house’s website, AMFI website and investment websites or apps. We take a look at its significance in a mutual fund scheme.
What is net asset value (NAV)?
Net asset value (NAV) represents a fund’s per-unit market value. This is the price at which investors are allotted units from a fund house or the price at which they can sell it back to the fund house. This is calculated by dividing the total value of all the assets in a portfolio, minus all its liabilities. The NAV of a fund is calculated by the mutual fund house itself or by an accounting firm hired by the mutual fund.
When is the NAV of a mutual fund scheme calculated?
The NAV is usually calculated and declared after market closing hours. It is impossible to calculate NAV during market hours as the price of the underlying stocks of the portfolio could change every second. Hence, the NAV is calculated at the end of every market day, after taking into account the closing market prices of the securities that the fund or scheme holds.
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View Details»Is the NAV of a scheme important for investors while buying a mutual fund scheme?
Wealth managers believe the NAV of the scheme is irrelevant for any investor, looking to buy a mutual fund. It does not matter to an investor whether the NAV is ₹15 or ₹1,000.
Suppose we hypothetically invest into two schemes A and B. Scheme A has a NAV of Rs 20 whereas scheme B has a NAV of Rs 50. We made an equal amount of investment of Rs 1 lakh each in both the schemes. Scheme A would come across as a cheaper buy because we got 5000 units as against 2000 units in
